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Fibre2Fashion
2 days ago
- Business
- Fibre2Fashion
Ind-Ra lowers India's FY26 GDP forecast to 6.3% amid global headwinds
India Ratings and Research (Ind-Ra) has lowered its GDP growth forecast for fiscal 2026 (FY26) to 6.3 per cent year-on-year (YoY), down 30 basis points (bp) from its earlier estimate of 6.6 per cent issued in December 2024. The revision reflects the evolving macroeconomic landscape shaped by geopolitical shocks and uneven domestic momentum, with the economy navigating a mixed bag of headwinds and tailwinds. 'Major headwinds are: i) uncertain global scenario from the unilateral tariff hikes by the US for all countries and ii) weaker-than-expected investment climate. The major tailwinds are: i) monetary easing, ii) faster-than-expected inflation decline, and iii) likely above-normal rainfall in 2025,' said Dr. Devendra Kumar Pant, chief economist and head – public finance at Ind-Ra. The downgrade also mirrors a bleak global environment: the IMF has trimmed its 2025 global GDP forecast to 2.8 per cent, while the World Bank projects an even lower 2.3 per cent expansion. Global trade volume is now expected to rise only 1.8 per cent in 2025, sharply below earlier forecasts and historical trends, the domestic rating agency noted. Retail inflation is expected to average just 3 per cent in FY26, down from 4.6 per cent in FY25 and well below the Reserve Bank of India's 4 per cent target. Food inflation turned negative in June 2025, contributing to the lowest CPI reading in over six years. With 100bp of rate cuts already delivered between February and June 2025, Ind-Ra sees room for an additional 50bp cut in the current easing cycle, possibly aided by CRR reductions. Commodity prices—both energy and non-energy—are expected to remain subdued in 2025 and into 2026-2027, limiting export momentum and further clouding India's external outlook. Private final consumption expenditure (PFCE) is projected to rise 6.9 per cent in FY26, sustaining its momentum from FY25 (7.2 per cent). The pick-up is attributed to easing inflation and improving real wages, although the growth remains tempered by a drop in household savings and increased personal loan obligations. The savings rate fell to 18.1 per cent in FY24 (from 20.1 per cent in FY22), while rising loan burdens have reduced disposable incomes. 'While low inflation augurs well for consumption demand, monetary easing is likely to ease pressure on loan repayments, and better monsoon is likely to translate into brighter agriculture prospects, thus supporting rural demand. However, the combined impact of tailwinds is unlikely to fully alleviate the adverse impact of the strong headwinds,' noted Paras Jasrai, associate director at Ind-Ra. Gross fixed capital formation (GFCF) growth is forecast to slow to 6.7 per cent in FY26, down from 7.1 per cent in FY25. A better-than-expected investment uptick in FY25, global capex hesitancy, and weak manufacturing sector outlook are dampening prospects. While sectors like logistics, renewables, and commercial real estate may sustain capex growth, others like garments and chemicals could see cutbacks. Ind-Ra expects the trade deficit to widen to $325.1 billion in FY26, up from $287.2 billion in FY25. However, strong remittances and a services surplus are likely to contain the current account deficit at 0.9 per cent of GDP. The basic external balance (current account plus net FDI) is set to deteriorate to a deficit of $34.5 billion, while the INR is likely to depreciate by 2.8 per cent against the USD. India Ratings has cut India's FY26 GDP forecast to 6.3 per cent from 6.6 per cent amid global trade uncertainty and weak investment climate. While low inflation, monetary easing, and a good monsoon support consumption, these tailwinds may not offset global headwinds. Inflation is seen averaging 3 per cent, with further rate cuts possible. Current account deficit is projected at 0.9 per cent of GDP. Fibre2Fashion News Desk (HU)
Hans India
5 days ago
- Business
- Hans India
Ind-Ra trims India's FY26 GDP growth forecast to 6.3 pc
New Delhi: India Ratings & Research (Ind-Ra) on Wednesday trimmed India's growth projection for the current fiscal to 6.3 per cent, citing uncertainties around US tariffs and weak investment climate. Ind-Ra expects GDP in FY26 to grow 6.3 per cent y-o-y, 30bps lower than its earlier forecast of 6.6 per cent made in December 2024. The economy is facing both headwinds and tailwinds, it said in its mid-year economic outlook. 'Major headwinds are: i) uncertain global scenario from the unilateral tariff hikes by the US for all countries and ii) weaker-than-expected investment climate. The major tailwinds are: i) monetary easing, ii) faster-than-expected inflation decline, and iii) likely above-normal rainfall in 2025', said Devendra Kumar Pant, Chief Economist and Head Public Finance, Ind-Ra. The Indian economy had grown at 6.5 per cent in 2024-25 (April 2024 to March 2025).
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Business Standard
6 days ago
- Business
- Business Standard
Ind-Ra cuts India's FY26 GDP growth forecast to 6.3% on weak outlook
India Ratings & Research (Ind-Ra) on Wednesday trimmed India's growth projection for the current fiscal to 6.3 per cent, citing uncertainties around US tariffs and weak investment climate. Ind-Ra expects GDP in FY26 to grow 6.3 per cent y-o-y, 30bp lower than its earlier forecast of 6.6 per cent made in December 2024. The economy is facing both headwinds and tailwinds, it said in its mid-year economic outlook. "Major headwinds are: i) uncertain global scenario from the unilateral tariff hikes by the US for all countries and ii) weaker-than-expected investment climate. The major tailwinds are: i) monetary easing, ii) faster-than-expected inflation decline, and iii) likely above-normal rainfall in 2025", said Devendra Kumar Pant, Chief Economist and Head Public Finance, Ind-Ra. The Indian economy had grown at 6.5 per cent in 2024-25 (April 2024 to March 2025) Ind-Ra's projections for FY26 are lower than the 6.5 per cent GDP growth projected by the RBI and the Asian Development Bank (ADB). The domestic rating agency expects average retail inflation at 3 per cent and exchange rate at 86.9 to a dollar in the current fiscal. Low inflation, monetary easing and so far favourable monsoons have brightened the scope for a continued economic recovery in FY26, and they are likely to minimise the impact of strong headwinds emanating from the uncertain global scenario. "While low inflation augurs well for consumption demand, monetary easing is likely to ease pressure on loan repayments, and better monsoon is likely to translate into brighter agriculture prospects, thus supporting rural demand. However, the combined impact of tailwinds is unlikely to fully alleviate the adverse impact of the strong headwinds", said Paras Jasrai, Economist & Associate Director, Ind-Ra. Ind-Ra said major growth drivers were expected to be monetary easing and capex. The pace of monetary easing in 2025 has been faster than our expectations. However, the tariff hikes by the US have increased the global economic uncertainty, leading to slower growth for both global demand and trade. "This has led to investors adopting a wait and watch mode before taking decisions on greenfield expansion," Ind-Ra said.
News18
6 days ago
- Business
- News18
Ind-Ra trims Indias FY26 GDP growth forecast to 6.3 pc
New Delhi, Jul 23 (PTI) India Ratings & Research (Ind-Ra) on Wednesday trimmed India's growth projection for the current fiscal to 6.3 per cent, citing uncertainties around US tariffs and weak investment climate. Ind-Ra expects GDP in FY26 to grow 6.3 per cent y-o-y, 30bp lower than its earlier forecast of 6.6 per cent made in December 2024. The economy is facing both headwinds and tailwinds, it said in its mid-year economic outlook. 'Major headwinds are: i) uncertain global scenario from the unilateral tariff hikes by the US for all countries and ii) weaker-than-expected investment climate. The major tailwinds are: i) monetary easing, ii) faster-than-expected inflation decline, and iii) likely above-normal rainfall in 2025", said Devendra Kumar Pant, Chief Economist and Head Public Finance, Ind-Ra. The Indian economy had grown at 6.5 per cent in 2024-25 (April 2024 to March 2025) Ind-Ra's projections for FY26 are lower than the 6.5 per cent GDP growth projected by the RBI and the Asian Development Bank (ADB). The domestic rating agency expects average retail inflation at 3 per cent and exchange rate at 86.9 to a dollar in the current fiscal. Low inflation, monetary easing and so far favourable monsoons have brightened the scope for a continued economic recovery in FY26, and they are likely to minimise the impact of strong headwinds emanating from the uncertain global scenario. 'While low inflation augurs well for consumption demand, monetary easing is likely to ease pressure on loan repayments, and better monsoon is likely to translate into brighter agriculture prospects, thus supporting rural demand. However, the combined impact of tailwinds is unlikely to fully alleviate the adverse impact of the strong headwinds", said Paras Jasrai, Economist & Associate Director, Ind-Ra. Ind-Ra said major growth drivers were expected to be monetary easing and capex. The pace of monetary easing in 2025 has been faster than our expectations. However, the tariff hikes by the US have increased the global economic uncertainty, leading to slower growth for both global demand and trade. 'This has led to investors adopting a wait and watch mode before taking decisions on greenfield expansion," Ind-Ra said. PTI JD DR DR view comments First Published: July 23, 2025, 13:15 IST Disclaimer: Comments reflect users' views, not News18's. Please keep discussions respectful and constructive. Abusive, defamatory, or illegal comments will be removed. News18 may disable any comment at its discretion. By posting, you agree to our Terms of Use and Privacy Policy.
Mint
14-05-2025
- Business
- Mint
Centre eyes over ₹45,000 crore from divestment in FY26, bets on sale of IDBI Bank
New Delhi: The Centre is eyeing receipts of more than ₹45,000 crore from divestment in the financial year 2025-26, with the bulk of it expected from the strategic sale of IDBI Bank Ltd, said two people aware of the matter. The stake sale in IDBI Bank is likely to fetch ₹30,000–35,000 crore, while ₹10,000–15,000 crore could come from the offer for sale (OFS) of equity in other listed public sector undertakings (PSUs), the people mentioned above told Mint on the condition of anonymity. 'The long-pending IDBI Bank stake sale is expected to conclude this fiscal. It's the biggest-ticket item in this year's divestment plan," said the first person cited above. 'The rest is likely to come from minority stake sales in listed PSUs." The central government and Life Insurance Corporation (LIC) together own 95% of IDBI Bank and plan to divest 60.72% of the combined shareholding. The privatization plan was first announced in the Union Budget for 2021–22. Also read | Centre may raise about ₹10,000 crore in FY25 divestment, largely from OFS route 'The return from IDBI is a question of the quantum of stake sale from the government," said Rishi Shah, partner and economic advisory services leader, Grant Thornton Bharat. 'At current market valuations, there is a potential for a windfall gain for the exchequer." No divestment target The Centre has stopped setting separate disinvestment targets since FY24. However, the budget estimate (BE) for miscellaneous capital receipts (MCR), which includes proceeds from equity investments and public asset management, is pegged at ₹47,000 crore for 2025-26. For 2024-25, the MCR was revised to ₹33,000 crore from ₹50,000 crore pegged in the budget estimates. Economists note that 'miscellaneous capital receipts" is largely a matter of nomenclature, but the key issue is the government's ability to mobilise funds under it. 'It (divestment) will depend on market conditions, the valuations and the inherent strength of the company, which is put up for disinvestment," said Devendra Kumar Pant is the chief economist at India Ratings & Research. 'While in the last few years the government has not been able to meet its miscellaneous capital receipt/disinvestment targets in the last few years, earlier (in 2017-18) the government was able to overachieve its targets." Read this | Mint Primer: Is now the best time to pursue divestment? 'Probably a relook at reasons of over-achievement vis-a-vis under-achievement could help in fine-tuning the strategy," he added. The central government has only met its disinvestment targets once in the last 10 years, in 2017-18. That year, it exceeded the target of ₹1 lakh crore, with actual proceeds of ₹1,00,056 crore The divestment proceeds stood at about ₹10,000 crore in FY25, with most of it from the government's minority stake sales in General Insurance Corporation of India ( ₹2,345.55 crore), Cochin Shipyard Ltd ( ₹2,015.32 crore), and Hindustan Zinc Ltd ( ₹3,449.18 crore), among others. 'There is no fixed divestment target anymore. The government has moved away from a numbers-driven approach to one that prioritizes strategy and value," said the second person, mentioned above.'It is a more pragmatic and calibrated process now, focusing on the right timing, favourable market conditions, and long-term value creation from public sector equity sales." A spokesperson of the ministry of finance didn't respond to emailed queries. 'The government's move away from rigid divestment targets is a pragmatic acknowledgement of market realities. History shows us that actual receipts often fell short of targets. The important part is that the government is able to meet its target, which in turn enhances the credibility in the larger market," said Shah of Grant Thornton Bharat. Also read | Centre may revive plan for fertiliser PSUs divestment in a phased manner from FY26 In January 2024, Mint had reported that there were as many as eight strategic disinvestment plans at various stages, which included selling the government's stake in the BEML Ltd, Shipping Corp. of India Ltd, HLL Lifecare Ltd, Projects & Development India Ltd, and Indian Medicines Pharmaceutical Corp. Ltd., among others. Most of these have made little progress and could be taken up in the coming years, depending on the market conditions. Fertilizer PSU sales still on hold There's no plan yet to revive the strategic sale of state-owned fertilizer companies during 2025-26, the second person mentioned above said. "Divesting India's fertilizer PSUs presents complex challenges, balancing efficiency with food security," the second person quoted earlier said. 'While privatisation could enhance efficiency, it risks price volatility and market instability." To be sure, the current subsidy regime complicates private sector participation, and many PSUs face financial and operational inefficiencies. Environmental concerns, job losses, and regulatory hurdles further complicate the process. In 2022, Niti Aayog had identified eight fertilizer PSUs for strategic sale, but the Centre put the plan on hold the next year as it prioritised increasing domestic production. And read | Budget 2024: Divestment target for FY25 may be at least 20% lower than last year's These included Brahmaputra Valley Fertilizer Corp. Ltd, Fertilizers and Chemicals Travancore, FCI Aravali Gypsum and Mineral Ltd, Madras Fertilizers Ltd, National Fertilizers Ltd, Rashtriya Chemicals & Fertilizers, Fertilizer Corp. India Ltd and Hindustan Fertilizer Corp. Ltd, The central subsidies for fertilizers have seen a significant cut, from ₹1.71 trillion (revised estimates) in 2024-25 to ₹1.68 trillion (budget estimates) in 2025-26.
